The U.S. Department of Agriculture (USDA) issued its latest U.S. and global supply demand report on May 10. The report includes the department’s estimates for production, supply, and demand in the 2017/18 marketing year and its first forecasts for the upcoming 2018/19 marketing year. The report included positive estimates for the U.S. soybean industry in both marketing years.
The positive forecast for 2017/18 was USDA raising its forecast for the volume of soybeans to be processed in the U.S. by 20 million bushels to 1.99 billion bushels (54.16 million metric tons (MMT)) based on stronger domestic and export demand for soymeal and soyoil. The forecasted crush volume would be a new record high and equal to 45.3 percent of the record crop of 4.392 billion bushels (119.52 MMT) produced in 2017.
USDA increased its forecast for U.S. soymeal exports in 2017/18 from 11.34 MMT to 11.52 MMT. It also raised its forecast for U.S. soyoil exports in 2017/18 from 0.91 MMT to 1.04 MMT. The greater export demand for the two soybean products was largely a result of Argentina’s soybean production in 2018 falling to an estimated 39 MMT from 57.8 MMT in 2017. Argentina is the world’s top exporter of soymeal and soyoil as a result of export tax policies that discourage soybean exports. USDA expects Argentina to export 2.32 MMT less soymeal and 0.71 MMT less soyoil in its marketing year that ends March 31, 2019. Because of its poor soybean crop, the U.S. had sold 573,000 metric tons (MT) (21 million bushels) of soybeans for export to Argentina as of May 3.
USDA raised its forecast for U.S. soymeal consumption in 2017/18 by 0.41 MMT to 31.75 MMT. However, it lowered its forecast for domestic soyoil usage from 9.435 MMT to 9.389 MMT because of less expected use for biodiesel production.
Because of the increase in soybean crush volume, USDA lowered its forecast for U.S. soybean ending stocks on August 31, 2018 by 20 million bushels to 530 million bushels (14.43 MMT). It also raised its estimate of the average farm price for soybeans in 2017/18 by 5 cents per bushel to $9.35/bushel ($343.52/MT).
USDA raised its forecast for Brazil’s 2018 soybean crop by 2 MMT to a record 117 MMT (4.298 billion bushels). USDA expects Brazil to export 73.3 MMT (2.693 billion bushels) of soybeans in 2017/18 as well as 15.6 MMT of soymeal and 1.48 MMT of soyoil.
On the demand side, USDA raised its forecast for soybean imports by the European Union (EU) in 2017/18 by 100,000 MT to 14.1 MMT, but it reduced its forecast for EU soymeal imports by 400,000 MT to 18.5MMT because of lower soymeal exports by Argentina. Soybean imports by Egypt were increased by 200,000 MT to 2.8 MMT. Total global soybean imports in 2017/18 are forecasted at 152.63 MMT, up from USDA’s April forecast of 151.71 MMT.
Outlook for 2018/19 Marketing Year
USDA is forecasting global soybean production in 2018/19 at 354.54 MMT (13.026 billion bushels). That would be 17.84 MMT greater than in 2017/18 as a result of an expected recovery in Argentina’s soybean production to 56 MMT. U.S. soybean production in 2018 is forecasted at 4.28 billion bushels (116.48 MMT) based on an average yield of 48.5 bushels per acre and a harvested area of 88.2 million acres. USDA tentatively forecasts the average farm price for soybeans at a mid-point of $10/bushel). USDA will release its first forecast for U.S. planted area in June. U.S. soybean ending stocks on August 31, 2019 are forecasted at 415 million bushels (11.29 MMT), a decrease of 115 million bushels (3.13 MMT) from a year earlier.
USDA’s forecast for global soybean consumption in the 2018/19 marketing year is 357.72 MMT (13.142 billion bushels). That would be an increase over 2017/18 of 15.43 MMT (566.8 million bushels) or 4.5 percent over consumption in 2017/18. Of that amount, 7.6 MMT is forecasted to occur in China. China’s imports of soybeans in 2018/18 are forecasted to increase by 6 MMT to 103 MMT (3.784 billion bushels). USDA expects China to import 64.5 percent of all soybeans export from all suppliers.
Global soybean exports in 2018/19 are forecasted to increase by 10.56 MMT. U.S. soybean exports in 2018/19 are forecasted at a record 2.29 billion bushels (62.32 MMT), an increase of 225 million bushels (6.12 MMT) over 2017/18. That would be the most soybeans the U.S. has ever exported in any marketing year. U.S. soymeal and soyoil exports in 2018/19 are forecasted at 11.25 MMT and 0.95 MMT, but they may be even higher because of Argentina’s poor soybean crop. The highest U.S. soymeal exports in any marketing year of 11.891 MMT were in 2014/15 after Argentina suffered poor crops in 2012 and 2013.
U.S. domestic use of soymeal and soyoil are forecasted to increase in 2018/19 by 180,000 MT and 270,000 MT, respectively. The increase in soymeal use is based on greater soymeal usage for animal feed and greater usage of soyoil primarily for biodiesel production.
If USDA’s forecasts are accurate, the U.S. will export 64 percent of its 2018 soybean crop either as whole soybeans or as soybeans or soymeal. That would be the highest share of the crop ever exported.
Brazilian soybean production in 2019 is forecasted at 117 MMT, the same as in 2018. Argentina’s soybean production is forecasted at 56 MMT, up from 39 MMT in 2018. USDA expects China’s soybean production in 2018 to decline to 10.1 MMT from 10.2 MMT in 2017 despite the fact the Chinese government is urging its farmers to plant more soybeans in 2018.
The markets that are forecasted to import significantly more soybeans in 2018/19 than in 2018/19 are China (+6 MMT), Pakistan (+0.3 MMT), Mexico (+0.25 MMT), Turkey (+0.25 MMT), Vietnam (+0.2 MMT), Indonesia (+0.15 MMT), Iran (+0.125 MMT), Egypt (+.1 MMT), the EU (+0.10 MMT) and Russia (+0.1 MMT).
Global soymeal imports are forecasted to increase by 354,000 MT in 2018/19. Countries expected to see significant increase include Indonesia, Vietnam, Belarus, Chile, South Korea, the Philippines, Russia, and the United Arab Emirates.
The bottom line is that demand for U.S. soybeans and soybean products are very positive for the current and next marketing year. Soybean ending stocks were lowered for both 2017/18 and 2018/19, and the preliminary price outlook for 2018/19 is better than in 2017/18. Global soybean consumption is expected to exceed production in both marketing years. That is forecasted to result in lower global stocks. If there are weather problems in any of the key soybean countries in 2018 or 2019, stocks will further tighten and create an opportunity for higher prices for soybean farmers.
To read the entire World Agricultural Supply and Demand Estimates (WASDE) report, please click here.